Private Wealth - New Dawn in European Succession
It seems somehow fitting that on 17 August, when much of Europe is en vacances, is the day that the EU Succession Regulation comes into force.
After all, many of those who will benefit are those who, on a warm summer’s evening over a glass of prosecco decided to buy a bolt hole abroad or indeed move to the sun for good.
Of course in an increasingly global world there are many other reasons that people live and work outside of the country of their nationality and it is the increasingly international nature of people’s lives that has made the creation of The European Succession Regulation (otherwise known as Brussels IV) necessary.
The different succession regimes around the European Union have long caused difficulties in an age when cross border living, and thus cross border estates are an increasingly common phenomenon. Until now each EU member state has applied its own rules to international matters often creating complicated situations and confusion over which country's law should apply.
The Succession Regulation is meant to simplify matters. Whether it will do so of course remains to be seen. It provides that where EU citizens have assets in two or more countries a single law of succession will apply to their Estate on death. The general principle is that the law applicable to the succession as a whole should be the law of the state in which the deceased was habitually resident at the time of death.
However those who do not wish the law of their habitual residence to apply, may make a choice that the law of their nationality will apply to their Estate on death. So for a German habitually resident in Spain, Spanish law would apply to the Estate on death, unless the testator made an election in his Will that German law should apply.
The UK, together with Ireland and Denmark, has opted out of the Succession Regulation. However Britons with close connections to other EU states will still be affected. For example a Briton who is habitually resident in France, will be able to choose that the law of the part of the UK with which they are most closely associated- for example England and Wales, applied to their whole Estate on death. This will avoid forced heirship and therefore potentially be of benefit to those who take advantage of it. However they will need to ensure that they make a Will stating their choice of law.
A Briton who merely owns a holiday home in France but who is habitually resident in the UK, should also be able to elect for English (or Scottish or Northern Irish) law to apply to that property on death. Again the individual's Will must make the choice of law clear.
The situation for other EU nationals resident in the UK is more complicated. For example if a German national habitually resident in London and wishes English law to apply to his death Estate, the English courts are not obliged to comply. However under Brussels IV if the German is non-resident the normal situation would be that German law would not apply to the Estate on death. How the courts will deal with such cases in practice remains to be seen.
Whilst the consequences of the Succession Regulation will take some time to become clear, it is certainly advisable for anyone with links to another European jurisdiction to take time now to review their Wills.
View more blogs in our private wealth blog area